Unifi (UFI) 8-K Regulation FD Disclosure

Exhibit 99.1

For more information, contact: James M. Otterberg Chief Financial Officer (336) 316-5424

Unifi Announces Second Quarter 2014 Results

GREENSBORO, N.C., – January 21, 2014 – Unifi, Inc. (NYSE: UFI) today released preliminary operating results for the second quarter ended December 29, 2013 of its 2014 fiscal year. Net income for the current year quarter was $6.4 million, or $0.34 per basic share, compared to net income of $2.4 million, or $0.12 per basic share, for the prior year quarter, reflecting gains from improved margins, lower net interest expense and higher earnings from the Company’s equity affiliates. These gains were partially offset by higher expenses for income taxes.

Highlights for the December 2013 quarter included:

● Adjusted EBITDA improved to $12.6 million for the current year quarter from $12.2 million for the prior year quarter;

● Domestic gross profit was higher due to improved margins and lower expenses for depreciation;

● Higher earnings from the Company’s equity affiliates, primarily Parkdale America LLC, increased income before income taxes by $3.9 million versus the prior year quarter; and

● The Company used $12.9 million of excess cash flows from operations to repurchase 522,220 shares of its common stock under its previously announced stock repurchase program.

A net sales decrease of $11.5 million, or 6.7%, to $160.6 million for the second quarter of the current year compared to net sales of $172.1 million for the prior year quarter, was offset by improved operating margins and earnings from equity affiliates. The comparative decrease was primarily attributable to the timing of the holiday shutdown, which adversely affected domestic sales activity in the second quarter of the current year versus the third quarter of the prior year; in addition, declines in sales volumes for the Company’s foreign subsidiaries, reductions in lower margin business and the currency translation effects of the weakened Brazilian Real also contributed to lower net sales.

 

Unifi Announces Second Quarter 2014 Results - page 2

“We are encouraged with the continued performance of our domestic business, focusing on products that are profitable, defensible and compliant within the Central American Free Trade Agreement, and we have experienced growth in our domestic operations from our premier value-added products,” said Roger Berrier, President and Chief Operating Officer of Unifi. “Although operating conditions remain challenging in Brazil and China, we remain encouraged by the long-term sales opportunities that we anticipate from the development work that we are currently engaged in.”

Cash-on-hand as of December 29, 2013 was $15.5 million, an increase of $6.8 million from June 30, 2013. Net debt at the end of the December 2013 quarter was $87.3 million, compared to $89.0 million at June 30, 2013. As of December 29, 2013, the weighted average interest rate for the Company’s outstanding debt obligations was 3.1%.

Net income was $15.3 million, or $0.80 per basic share, for the six months ended December 29, 2013 compared to net income of $4.7 million, or $0.23 per share, for the prior year six-month period. A net sales decrease of $15.7 million, or 4.5%, to $329.3 million for the current year six-month period compared to net sales of $345.0 million for the prior year six-month period, was offset by improved operating margins and earnings from equity affiliates.

“We continue to have strong, improving earnings and cash flow. Our operating results over the past twelve months have enabled us to fund our operating and capital needs, while repurchasing $38 million of the Company’s common stock and reducing net debt by slightly over $4 million, significantly enhancing shareholder value,” said Bill Jasper, Chairman and CEO of Unifi. “We expect to continue our financial improvement by continuing to focus on lean manufacturing initiatives, enriching our product mix and deriving value from sustainability based initiatives.”

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(amounts in thousands, except share and per share amounts)

	December 29, 2013			June 30, 2013
ASSETS
Cash and cash equivalents	$	15,522		$	8,755
Receivables, net		77,536			98,392
Inventories		110,765			110,667
Income taxes receivable		1,374			1,388
Deferred income taxes		1,831			1,715
Other current assets		5,371			5,913
Total current assets		212,399			226,830
Property, plant and equipment, net		116,562			115,164
Deferred income taxes		2,590			2,196
Intangible assets, net		8,549			7,772
Investments in unconsolidated affiliates		101,562			93,261
Other non-current assets		4,510			10,243
Total assets	$	446,172		$	455,466
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	35,740		$	45,544
Accrued expenses		12,517			18,485
Income taxes payable		417			851
Current portion of long-term debt		1,316			65
Total current liabilities		49,990			64,945
Long-term debt		101,508			97,688
Other long-term liabilities		6,950			5,053
Deferred income taxes		1,991			1,300
Total liabilities		160,439			168,986
Commitments and contingencies
Common stock, $0.10 par (500,000,000 shares authorized,19,035,918 and 19,205,209 shares outstanding)		1,904			1,921
Capital in excess of par value		42,814			36,375
Retained earnings		248,242			252,112
Accumulated other comprehensive loss		(8,662	)		(5,500	)
Total Unifi, Inc. shareholders’ equity		284,298			284,908
Non-controlling interest		1,435			1,572
Total shareholders’ equity		285,733			286,480
Total liabilities and shareholders’ equity	$	446,172		$	455,466

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(amounts in thousands, except per share amounts) 

	For the Three Months Ended						For the Six Months Ended
	December 29, 2013			December 23, 2012			December 29, 2013			December 23, 2012
Net sales	$	160,617		$	172,071		$	329,286		$	344,971
Cost of sales		142,120			155,380			290,804			310,260
Gross profit		18,497			16,691			38,482			34,711
Selling, general and administrative expenses		11,491			11,532			21,605			22,679
Provision for bad debts		87			73			49			183
Other operating expense, net		1,145			580			2,769			1,161
Operating income		5,774			4,506			14,059			10,688
Interest income		(142	)		(144	)		(1,356	)		(268	)
Interest expense		903			1,361			2,155			2,805
Loss on extinguishment of debt		—			114			—			356
Equity in earnings of unconsolidated affiliates		(5,122	)		(1,258	)		(11,245	)		(1,929	)
Income before income taxes		10,135			4,433			24,505			9,724
Provision for income taxes		3,924			2,216			9,675			5,449
Net income including non-controlling interest		6,211			2,217			14,830			4,275
Less: net (loss) attributable to non-controlling interest		(232	)		(209	)		(483	)		(445	)
Net income attributable to Unifi, Inc.	$	6,443		$	2,426		$	15,313		$	4,720
Net income attributable to Unifi, Inc. per common share:
Basic	$	0.34		$	0.12		$	0.80		$	0.23
Diluted	$	0.32		$	0.12		$	0.76		$	0.23

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(amounts in thousands)

	For The Six Months Ended
	December 29, 2013			December 23, 2012
Cash and cash equivalents at beginning of year	$	8,755		$	10,886
Operating activities:
Net income including non-controlling interest		14,830			4,275
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Equity in earnings of unconsolidated affiliates		(11,245	)		(1,929	)
Dividends received from unconsolidated affiliates		3,059			2,724
Depreciation and amortization expense		8,625			12,997
Loss on extinguishment of debt		—			356
Non-cash compensation expense		1,611			1,326
Excess tax benefit on stock-based compensation plans		(3,536	)		—
Deferred income taxes		25			3,159
Other		3,465			97
Changes in assets and liabilities, excluding effects of foreign currency adjustments:
Receivables, net		19,829			10,447
Inventories		(1,609	)		5,467
Other current assets and income taxes receivable		3,684			(784	)
Accounts payable and accrued expenses		(19,299	)		(12,235	)
Income taxes payable		3,137			(1,161	)
Net cash provided by operating activities		22,576			24,739
Investing activities:
Capital expenditures		(9,431	)		(2,872	)
Other investments		—			(1,620	)
Proceeds from sale of assets		268			56
Proceeds from other investments		392			—
Other		(60	)		(55	)
Net cash used in investing activities		(8,831	)		(4,491	)
Financing activities:
Proceeds from revolving credit facility		72,700			28,700
Payments on revolving credit facility		(74,800	)		(35,700	)
Proceeds from term loan		7,200			—
Payments on term loans		—			(10,516	)
Payments of debt financing fees		(3	)		(63	)
Proceeds from related party term loan		—			1,250
Repurchase and retirement of common stock		(18,686	)		—
Proceeds from stock option exercises		2,833			29
Contributions from non-controlling interest		346			480
Excess tax benefit on stock-based compensation plans		3,536			—
Other		(29	)		(39	)
Net cash used in financing activities		(6,903	)		(15,859	)
Effect of exchange rate changes on cash and cash equivalents		(75	)		(29	)
Net increase in cash and cash equivalents		6,767			4,360
Cash and cash equivalents at end of period	$	15,522		$	15,246

RECONCILIATIONS OF NET INCOME ATTRIBUTABLE TO UNIFI, INC. TO ADJUSTED EBITDA (Unaudited)

(amounts in thousands)

The reconciliations of Net income attributable to Unifi, Inc. to EBITDA, Adjusted EBITDA including equity affiliates and Adjusted EBITDA are as follows:

	For the Three Months Ended						For the Six Months Ended
	December 29, 2013			December 23, 2012			December 29, 2013			December 23, 2012
Net income attributable to Unifi, Inc.	$	6,443		$	2,426		$	15,313		$	4,720
Provision for income taxes		3,924			2,216			9,675			5,449
Interest expense, net		761			1,217			799			2,537
Depreciation and amortization expense		4,080			6,298			8,349			12,631
EBITDA		15,208			12,157			34,136			25,337
Non-cash compensation expense		1,197			705			1,611			1,326
Loss on extinguishment of debt		—			114			—			356
Other		1,284			438			2,546			891
Adjusted EBITDA including equity affiliates		17,689			13,414			38,293			27,910
Equity in earnings of unconsolidated affiliates		(5,122	)		(1,258	)		(11,245	)		(1,929	)
Adjusted EBITDA	$	12,567		$	12,156		$	27,048		$	25,981